“There is always a political risk but I would say to investors, take a look at Zimbabwe”
African Business: What does Emerson Mnangagwa’s presidency look like and what does he represent?
Dr Knox Chitiyo: Mnangagwa’s great mantra was and continues to be that Zimbabwe is open for business. He was seen more as a business technocrat, similar in some ways to Ramaphosa in South Africa as a businessman who would run the economy. There were positives and negatives. The good thing is that he tried to promote the ease of doing business in Zimbabwe – Zimbabwe has improved in that regard.
The border bureaucracy has been reduced to some extent, but there is still a long way to go. They set up the Zimbabwe Investment Authority which is there specifically to guide investors. Some areas of the economy had improved before Covid – the tourism industry had definitely improved.
The mining sector has improved, the agro-industry has improved. To a certain extent, Mnangagwa and the government tried to create an enabling environment and there was a lot of consultation with the business sector, with the informal sector. There is in fact a Presidential Advisory Council which advises Mnangagwa on economic policy.
The biggest thing they did was remove the indigenization law, which mainly concerned mining, which meant that 51% of all profits were to stay in Zimbabwe. This has had a significant deterrent effect on many investors. It was abolished in 2018, so more business-friendly legislation came into effect.
That’s the bright side, but there have been issues – there has been corruption and issues regarding the extent to which foreign investors have been able to come in and hand over their profits because Zimbabwe’s currency has been a problem. . But overall they tried.
The problem for Mnangagwa is that he was brought in by the military – he has to keep the national and political agenda in mind. The problem is that politics have been involved in Zimbabwe’s economy. Politics is still an undercurrent in the economy.
Who is the opposition, and is it robust and credible?
In purely political terms, Mnangagwa had a good Covid – he was able to consolidate his power vis-Ã -vis the opposition, both within Zanu-PF and also the opposition outside, c that is to say the MDC.
In purely political terms, the opposition has had a very bad Covid. [Opposition leader] Nelson Chamisa led in 2018-19 thanks to a good electoral result … his peak was probably 2019.
But when it comes to Covid, there have been no political meetings because of the lockdown. And it really hit the opposition.
There were no by-elections and the opposition split. The opposition has fragmented and fractured, and Chamisa’s position in Zimbabwe and abroad has been hit hard.
Chamisa still has support in the younger urban community, but even there he has lost his support. All this made the game of Zanu-PF.
A general election is scheduled for 2023. There are supposed to be by-elections but due to Covid we don’t know if and when they will take place. Chamisa is really desperate for the by-elections because he thinks he could win one and regain some credibility. Overall, the Chamisa opposition has lost quite a bit of ground. It is possible that they will get him back at the end of Covid, but he has a lot of work to do.
Civil society is still vibrant but the government is considering legislation, there is talk of an NGO bill that could be a crackdown on human rights NGOs in Zimbabwe that the government considers hostile. Human rights organizations are in a precarious situation.
From an investor’s perspective, what are the political risks on the horizon?
I think the fundamental political risk is that there is clearly tension between Mnangagwa and his number two [Vice-President] Constantin Chiwenga. These appear to have been handled during Covid, but we don’t know how that will play out. Mnangagwa is not young and in 2023 he will be over 80, so there are the age issues.
[Relations with Chiwenga] can be managed or content, but we don’t know. With the elections in Zimbabwe and the period after the elections, things are getting very divisive.
The elections themselves can be a bit risky. I wouldn’t want to exaggerate and say that we are definitely heading into a bloody and divisive time. I don’t know if this is where we are headed given the weakness of the opposition right now, but Managagwa’s age and the relationship between him and Chiwenga is a factor.
On the positive side, we have had good rains, Zimbabwe’s agriculture is actually booming, some diasporas are coming back and investing in agriculture. Mining resumes, tourism has been hit by Covid, but some of the moving parts of the economy have picked up. Horticulture is doing well.
The government is forecasting 7% growth this year – I think that’s a little improbable. The World Bank is forecasting growth of 4%, which is more realistic, but that in itself is quite impressive as we have had negative growth for the past two years.
There is always a political risk, but I would say to investors, take a look at Zimbabwe, have conversations. There is a risk, sure, but I wouldn’t say it’s the kind of intolerable risk where you will definitely crash and burn as an investor. We have had domestic and foreign investors over the past few years, giving Zimbabwe a second look.
I wouldn’t say politics is an insurmountable barrier to investing. The only thing to worry about is corruption issues, that’s quite a problem in itself and something that people can report, but every country has corruption issues.
What has been the public health response to Covid-19?
The government was a bit slow to embrace last year when Covid hit. They have since moved forward. Most of the vaccines in Zimbabwe are Sinopharm, the Chinese vaccine, and to some extent the Russian Sputnik.
The government made the vaccines available. The problem to some extent is that people themselves have been slow to adopt the vaccine. People are now rushing for the vaccine because we have our third wave of the virus and it’s the Delta variant that’s more virulent.
Official figures indicate that more than a million people have received their first or second vaccine – the idea is to have at least 10 million people vaccinated in the next few years. The vaccine is available in cities, rural and peri-urban areas and it is available free of charge.
There is a Covid task force comprising the government and the health sector and the response has been reasonable. More could have been done and can be done, but the government was part of it.
Zimbabwe is now in its fourth lockdown, due to the Delta variant. This was tricky because it is 80-90% an informal economy and the blockages really hit the informal economy.
There have been negotiations around a responsible semi-opening to avoid a full economic lockdown. They did not force people to be locked in their homes. Everyone is praying and hoping that Zimbabwe can move forward.